The young companies that are poised to transform the supply chain management profession fall into a relatively few categories. The most interesting start-ups we are seeing have business models based on the sharing economy, the Internet of Things (IoT), predictive analytics, and robotics.
The Sharing Economy: Five companies are very interesting: Flexe, Deliv, Doorman, Transfix, and Shyp.
Flexe describes itself as a marketplace for warehouse space. It is a cloud-based marketplace platform analogous to airbnb. Flexe works in much the same way. So for example, if you are a distributor of Halloween costumes, your warehouse is far from being fully utilized after the holiday the holiday. Your company can list your excess capacity on Flexe and provide companies that need short term warehousing services – perhaps a toy company with a hot new product release – 3PL warehousing services.
There is far more action among companies trying to pursue an UBER model for moving freight than on the airbnb warehousing services side. And among UBER style start-ups, most of the focus is on revolutionizing last mile deliveries.
Deliv describes itself as a bridge for the last mile gap between retailers and customers. The company is a crowd sourced delivery option that stretches across multiple retail segments. This company uses a smartphone app to alert pre-qualified drivers of a pending delivery, and the driver picks up the merchandise from the retailer and delivers it to the customer. This is all generated from an e-commerce order where a customer selects same-day delivery from the list of fulfillment options. Once the order has been picked up, the customer receives real-time tracking information to ensure they are home to receive the order. Deliv currently works with over 125 retailers in 17 markets across the US and is continuing to expand. With a large percentage of retailers interested in the use of crowd-sourced delivery options, this is a market that could continue to see new players in an already crowded space.
Doorman is another last mile delivery venture that takes a uniquely different approach. Doorman is all about ensuring customers do not miss a delivery, or have to worry about package theft. Customers have their packages shipped to a Doorman warehouse, and using their smart-phone app, schedule deliveries for when they are home. The key part of Doorman is that deliveries are scheduled between 6pm and midnight. For those people that work late and would generally miss a home delivery, this eliminates the problem. Doorman offers three pricing packages – pay as you go ($3.99 / package), the Gold Plan ($29 / month, includes 1 hour delivery windows and unlimited deliveries and returns), and the Silver Plan ($19 / month, includes 2 hour delivery timeframes and unlimited deliveries). The service also accepts extra-large packages, with an additional fee depending on the size.
Longer haul moves also have a lot of potential for the UBERIZATION of freight. In this segment, we talked to the CEO of Transfix, Andrew McElroy. Instead of being compared to UBER, he prefers to call his company a “mobile-based freight brokerage.” Honestly, if the technology is similar, we don’t see much difference between a technology-enabled brokerage and an Uber freight platform. After all, a broker is a middleman who takes a small fee for connecting buyers and sellers. So UBER is a broker.
Analogous to UBER, the small trucking carriers’ drivers or dispatchers who have signed up with Transfix use their smart phones to confirm rates and tenders, download logistics documents, book a time for a pickup, and get turn by turn directions. Because the trucker’s phones are kept on, their trucks can be tracked, and shippers can use their Transfix application for track and trace purposes. Transfix wants to make themselves attractive to trucking firms, so they pay carriers in 24 hours and get reimbursed at a later date by shippers. Although they got started in 2013, they already have grown to over $1 million in gross revenues per month and are continuing to grow at over 15% per month.
The final sharing economy company we are highlighting is a little different take on things. Shyp is a packaging and shipping company that uses contract workers to pick-up, pack, and ship orders. A customer takes a picture of the item they are shipping through the Shyp app, and this starts the process. A Shyp courier arrives to ship the package through the lowest-cost option. The company will also package a customer’s order before bringing it to their warehouse to send to the final destination. The company charges $5 for pick-up, packaging pricing is based on size and fragility, and shipping uses the lowest rates available. This company is still tapping into the UBERIZATION of freight, but is bringing in the packaging angle which speaks to those people who do not want to spend the time packaging their own items.
The Internet of Things: We have talked to four companies using IoT type technologies to help improve supply chain resiliency for inbound strategic materials. Two had customers we interacted with (Next Generation Supply Chain Risk Management: A Case Study and General Motors’ Approach to Supply Chain Resiliency) and who sung the vendors’ praises. Those two IoT companies are riskmethods and Resilinc.
We are also categorizing location-based technology under IoT. GPS is a ubiquitous technology in today’s connected world, due in large part to smart phones and the capabilities they offer. But use of GPS in the warehouse is limited by signal (GPS and cell tower) disruptions. What if you could use the magnet in your smart phone in place of your GPS coordinates? Here’s a story about a start-up named Reckon Point that is leveraging WiFi, the Earth’s magnetic field, and smart phone compass capabilities for warehouse process and location tracking.
Predictive Analytics: What is the difference between predictive analytics and forecasting? All forecasting involves making a prediction, but not all forecasts are based on Big Data. ClearMetal is an example of a company applying simulation and advanced analytics to Big Data to help ocean carriers improve their profitability. That is a simplified high level explanation. The details on how ClearMetal does this are actually very interesting. You can read those details HERE.
Warehouse Robotics: We have written a number of times in Logistics Viewpoints about the burgeoning field of autonomous mobile robotics (AMR) in the warehouse. The availability of AMR for warehousing went into a bit of a lull after Amazon’s acquisition of Kiva. But recently there have been a few companies with novel robot applications that work collaboratively with people. These include Locus Robotics, a Massachusetts based start-up, and Fetch Robotics, a Silicon Valley start-up. It’s worth noting that often the primary value drivers of these systems lie in the processes by which they deploy and utilize the robots to increase efficiencies, rather than in the individual units themselves.
Locus Robotics’ system recently became commercially available and is being used within its sister company’s (Quiet Logistics) fulfillment operations. Associates scan, then place items into totes placed upon and transported by the robots. The robots autonomously navigate through the warehouse infrastructure along with others in the fleet, guided by the Locus server. The value driver of this solution appears to be its flexibility and the intelligence with which it utilizes the robots and staff to efficiently manage the facility’s workload. Fetch Robotics developed a pair of robots, branded Fetch and Freight. Freight augments manual picking by following associates through the picking process and then autonomously dispatches the order to its warehouse destination while the picker continues with his/her picking process, supported by another Freight unit. Both of these solutions offer cost-effective alternatives to manual picking processes. The reasonable upfront investment costs of these systems and the potential ROI they can deliver will be factors driving user adoption and deployment of these systems.
[…] at what changes will impact supply chain management, Logistics Viewpointhighlighted a few young companies that are working on robotics, IotT and the sharing […]